The Assets I Own and Why I Own Them

When life hands you lemons… 

You slice those suckers open, fish out the seeds, grow your own citrus, and sell ‘em for a profit. 

Or said another way, look for the opportunity in whatever the world throws at you. 

Right now, I’m applying that thesis to my personal financial life as I peer across the landscape of U.S. assets.  

Valuations are off-the-charts crazy nowadays, and I’ll just leave it at that. A number of impossibly smart investors I respect and who I’ve followed for many years—Michael Burry, Jeremy Grantham, others—are rightly sounding alarms about irrationally loony asset prices (stocks, bonds, real estate). 

I started sounding that alarm last summer, in a column I wrote about why I moved out of stocks and into gold and the Swiss franc. 

Granted, my exit was early. I missed the run that stocks have experienced in the past year. But I can honestly say that missing that train doesn’t faze me in the slightest. I never even think about it unless I am writing columns such as this one. 

See, I come at life and investing from an experiential point of view. By that I mean that “I’ve been there, done that.”  

I’m 55. I’ve been involved with Wall Street since 1984 as an investor, a professional trader/analyst, or as a financial journalist at the highest levels of that profession. I’ve seen bull markets and bears. I’ve seen flash-crashes and blow-off tops. I’ve heard all the rationalizations for why stocks are too cheap, only to see them go cheaper…and why they’re too expensive, only to see them race higher. 

And the one truth I take away from all of that is this: No one can time the market.  

Someone can get lucky. Might even get lucky twice in a row and think they’re the next coming of Warren Buffett. But they soon enough realize the error of their assumptions. 

Asset markets change unexpectedly. One day it’s all unicorn burps…the next, the bear has mauled the unicorn. 

The best any of us can do is prepare for what we see on the horizon before the horizon is right where we’re standing. 

With that as my preamble, let me tell you what I’ve been doing across all my investment accounts over the past year, from IRAs to standard brokerage accounts. None of this is a recommendation for what you should do. Everyone has their own risk tolerance and financial needs. I share this so that you might factor some of it into the larger mosaic that shapes your own investment decisions. 

As I noted, there was my move into Swiss francs and gold in what is my largest, multi-six-figure IRA. Combined, those two assets alone are 62% of that particular portfolio. They represent my concerns tied to a structurally weak U.S. dollar, unsupportable levels of debt globally, and emerging inflationary pressures.  

Playing off the inflation theme, nearly 9% of that portfolio is in a U.S. inflation-protected bond fund.  

I also own gold (miners and one particular exchange-traded fund that is not GLD) in a few other portfolios, as well as exposure to a silver miner, a silver streaming company, a uranium miner, and an iron-ore company. Those last four play to a long-term spike in commodity prices—the so-called commodity super-cycle trend—I see unfolding, as well as the reality that any hope of radically reducing the global carbon footprint will have to lean heavily into nuclear power. 

In another six-figure retirement account, I’ve got 70% in cash and inflation-linked securities in the U.S. and overseas. The rest of that portfolio is gold and global bonds. Again, this plays to my desire for financial insurance (gold) and financial stability (global bonds) in a prolonged selloff. 

Stocks these days are roughly 15% of my combined portfolios. I think stocks could easily lose 50% or 60% from current levels. 

So, the stocks I own were chosen specifically for their defensive characteristics (and in many cases their dividends). 

My greatest exposure: healthcare, pharma, and biotech. Whatever comes of the world, people are not going to give up medical care, prescriptions, and medical devices that make their lives healthier and more comfortable.  

Similarly, I own Big Tobacco and small marijuana. Users just ain’t gonna give up those vices. In fact, financial stress will likely exacerbate dependence on those vices. 

With weed, that will be legal across the country soon enough because of the tax dollars that financially embattled governments can swipe off the top, so that means a big rise in profits for the companies I own. Even in bear markets and inflationary periods, some stocks go up, particularly those whose products are in continual demand, and which have pricing power. 

Finally, I own several big-dividend stocks overseas, in markets as varied as Russia, Israel, Canada, and Japan. (In the August issue of the Global Intelligence Letter, I’ll be telling you about an overseas dividend stock that will benefit from an inflationary, post-pandemic global economy.)  

And there you have it…that’s how I have positioned my portfolio. It’s conservative, no doubt. But I’m looking for opportunity amid the madness I see on the horizon. And for me, this is what opportunity looks like.